HB0166ham001 102ND GENERAL ASSEMBLY

Rep. Thomas M. Bennett

Filed: 3/23/2021

10200HB0166ham001 LRB102 04060 LNS 23698 a

AMENDMENT TO HOUSE BILL 166

AMENDMENT NO. ______. Amend House Bill 166 by replacing everything after the enacting clause with the following:

"Section 1. Short title. This Act may be cited as the Carbon Dioxide Geologic Storage Act.

Section 5. Statement of policy. It is in the public interest to promote the geologic storage of carbon dioxide. Doing so will help ensure the viability of State industries and will promote economic development in this State.

To be practical and effective, geologic storage of carbon dioxide requires cooperative use of surface and subsurface property interests often across large areas. It is therefore in the public interest to employ procedures that promote, in a manner fair to all interests, the use of all pore space in a clearly defined reservoir to ensure comprehensive management of the reservoir and the efficient use of natural resources. It is important that rules governing the use and development of subsurface pore space be consistent with both established precedents and subsurface private property rights.

Section 10. Definitions. As used in this Act:

"Area of review" means the area of review as required to be delineated in the storage operator's federal Underground Injection Control (UIC) program Class VI permit.

"Carbon dioxide injection well" means a well that is used to inject carbon dioxide into a reservoir for geologic storage.

"Carbon dioxide plume" means the extent underground, in 3 dimensions, of an injected carbon dioxide stream.

"Department" means the Department of Natural Resources.

"Geologic storage" means the underground storage of carbon dioxide in a reservoir.

"Mineral owner" means, as identified in the records of the recorder of deeds for each county containing some portion of the proposed reservoir, any owner of a whole or fractional interest in any or all minerals in real property above, below, or within the proposed reservoir that has been severed from the surface estate by grant, exception, reservation, lease, or other means.

"Pore space" means subsurface cavities or voids that can be used as storage space for carbon dioxide.

"Pore space owner" means the person, trust, corporation, or other entity who has title to the pore space.

"Storage facility" means the subsurface area consisting of the extent of the modeled carbon dioxide plume, as required to be delineated in the storage operator's federal UIC program Class VI permit.

"Storage facility permit" means a permit issued by the Department allowing a person to establish and operate a storage facility.

"Storage operator" means a person holding or applying for a storage facility permit under this Act and holding or applying for a UIC permit for the injection of carbon dioxide.

"Surface owner" means, as identified in the records of the recorder of deeds for each county containing any portion of the proposed storage facility, any owner of a whole or undivided fee simple interest or other freehold interest, which may or may not include mineral rights, in the surface above the proposed storage facility, but does not include an owner of a right-of-way, easement, leasehold, or any other lesser estate.

"UIC permit" means an Underground Injection Control permit authorized under the federal Safe Drinking Water Act's Underground Injection Control (UIC) Program that allows a person to operate a carbon dioxide injection well.

Section 15. Applicability. This Act applies only to carbon dioxide injections that commence on or after January 1, 2021.

Section 20. Storage facility permit.

(a) A storage operator may not operate a storage facility in this State without a valid storage facility permit issued by the Department. A storage facility permit may be transferred or assigned from one storage operator to another. Each permit is valid for 5 years after issuance.

(b) The Department shall issue or renew a storage facility permit if the storage operator has paid the first year's annual fee required by subsection (c) and has met the requirements of Section 30. In addition, the Department shall issue a storage facility permit following the public hearing described in subsection (f) upon its determination that:

(1) the storage facility permit is in the public interest; and

(2) to the extent the storage facility contains commercially valuable minerals, the interests of the mineral lessee or owner will not be adversely affected or have been addressed in an arrangement between the interest holder and the storage operator.

(c) The storage operator shall provide the Department an estimate of the amount of carbon dioxide to be injected into a storage facility for the period of the permit at the time of application for a storage facility permit. On an annual basis, a storage operator shall pay to the Department a fee of $0.08 per ton of carbon dioxide estimated to be injected into a storage facility. Each year the storage operator shall reconcile the past year's payment with the volume of carbon dioxide injected into a storage facility the previous year. The storage operator shall submit payment for the amount injected above the storage operator's estimate for the previous year. If the amount of carbon dioxide injected into a storage facility is less than the amount estimated, the Department shall refund the storage operator any overpayment.

(d) The Department may require a storage operator to make records available to the Department relating to the amount of carbon dioxide injected into a storage facility to ensure compliance with the fee requirements of subsection (c).

(e) The fees collected in subsection (c) shall be deposited into the Illinois Geologic Sequestration Special Fund.

(f) Prior to issuing a storage facility permit, the Department shall hold a public hearing. At least 30 days prior to the hearing, notice of the hearing shall first be published in the official newspaper of the county or counties where the area of review is proposed to be located and in other print or online publications as required by the Department, consistent with the requirements of the Notice By Publication Act. Notice shall be published daily for 2 consecutive weeks. At least 30 days prior to the hearing, notice of the hearing must be given to:

(1) each surface owner of land overlying the storage facility and within one-half mile of the storage facility's boundaries;

(2) each mineral lessee or mineral owner with property interests within one-half mile of the storage facility's boundaries; and

(3) any pore space owners within the storage facility and within one-half mile of the storage facility's boundaries.

Any objections to the issuance of the storage facility's permit not raised at the public hearing shall be waived.

Section 25. Ownership and conveyance of pore space.

(a) For real property that was divided into a surface estate and a mineral estate before the effective date of this Act, nothing in this Section shall alter, amend, diminish, or invalidate rights to the use of pore space that were explicitly acquired by conveyance document. Any such rights to the use of pore space that were not explicitly acquired remain vested in the surface estate.

(b) For real property that is divided into a surface estate and a mineral estate on or after the effective date of this Act, rights to the use of pore space shall remain vested in the surface estate unless such rights are explicitly conveyed.

(c) Grants of an easement to use or a lease of pore space for geologic storage shall be in perpetuity if so specified, except to the extent the grantee relinquishes the easement or lease because the pore space was not utilized for geologic storage purposes.

(d) Any conveyance of rights pertaining to pore space shall not confer any right to enter upon or otherwise use the surface of the land unless the conveyance document expressly so provides.

Section 30. Ownership requirements.

(a) No storage facility permit shall be issued unless the storage operator owns, or has obtained grants of easements or leaseholds for, all of the pore space in a storage facility.

(b) If a storage operator owns, or has obtained grants of easement or leaseholds for, more than 50% but less than 100% of the areal extent of pore space within a proposed storage facility, the storage operator may apply to the Department to amalgamate the remaining property interests.

Section 35. Amalgamating property interests.

(a) If a storage operator has applied to the Department to amalgamate any remaining property interests in a storage facility, the Department shall:

(1) notify any and all nonconsenting property owners who own property interests to be amalgamated;

(2) within 120 days, but no less than 60 days after the filing of the application, the Department shall conduct a hearing to determine the fair market value of each property owner's pore space to be amalgamated. The storage operator and each property owner has the right to present evidence as to the value of the pore space, including, but not limited to, the economic benefits to the storage operator, and to be represented by an attorney; and

(3) after the hearing, issue an order determining the fair market value of each nonconsenting owner's pore space.

(b) Upon payment by the storage operator to the Department of the total fair market value of the pore space to be amalgamated, the storage operator shall be granted a permanent easement by the Department upon the pore space. The Department shall record the easement with the appropriate county recorder of deeds. The Department shall remit funds received from the storage operator to each property owner consistent with the Department's determination of fair market value.

(c) Any easement granted under this Section shall not include the right to use the surface above a nonconsenting property owner's pore space.

(d) The Department has the authority to grant a permanent easement to State-owned pore space to a storage facility.

Section 40. Mineral interests. With the written consent of the storage operator, a mineral owner may drill through or near a storage facility to explore for or extract minerals if the drilling, extraction, and related activities are conducted in cooperation with the storage operator and in compliance with:

(1) Department requirements that preserve the storage facility's integrity; and

(2) all requirements of the storage operator's UIC permit.

Section 45. Title to carbon dioxide prior to certificate of completion. Absent conveyance documents to the contrary, the storage operator has title to the carbon dioxide injected into and stored in a storage facility and holds title until the Department issues a certificate of completion.

Section 50. Scope and remedy for claims of subsurface trespass.

(a) A claim of subsurface trespass shall not be actionable against a storage operator conducting geologic storage in accordance with a valid UIC permit and storage facility permit unless the injection or migration of carbon dioxide materially impairs interests outside the storage facility.

(b) A surface or subsurface property interest holder shall be permitted to recover money damages only for loss of a nonspeculative value resulting from the injection and migration of carbon dioxide beyond the storage facility.

(c) Punitive damages shall be barred if the storage operator acts in all material respects in compliance with the operational and monitoring requirements of the UIC permit.

Section 55. Project completion and title transfer.

(a) After carbon dioxide injections at a storage facility permanently cease, the storage operator may apply for a certificate of completion. Before issuing a certificate of completion, the Department, in consultation with the issuer of the UIC permit, shall find that:

(1) the storage operator is in full compliance with all laws governing the storage facility, including any ongoing UIC permit requirements;

(2) the storage operator addressed all pending claims, if any, regarding escape, release, leakage, or any similar migration of carbon dioxide outside the storage facility;

(3) all carbon dioxide injection wells are plugged, associated equipment and facilities are removed, and reclamation work is completed as required by the UIC permit issuer or the Department;

(4) the carbon dioxide in the reservoir is stable, which means that it is essentially stationary or, if it is migrating or may migrate, any migration will be unlikely to be outside of the storage facility, or to the extent beyond the area of review, the plume does not pose a risk of endangerment to underground sources of drinking water, consistent with Class VI permit requirements; and

(5) all monitoring wells, equipment, and facilities to be used in the post-closure period are in good condition and retain mechanical integrity.

(b) If the Department does not complete the review of a certificate of completion application within 90 days after receipt, including the public notice and input deemed appropriate by the Department, then the certificate of completion shall be deemed issued at the end of the 90-day period. If the Department does not find that the requirements in subsection (a) are met, then it may decline the application or require amendment to the application before granting the certificate of completion. If the Department requires amendment to the application, then the storage operator shall have 30 days to submit an amended application. Upon receipt of the amended application, the Department shall have 30 days to either grant or decline to grant the certificate of completion or the certificate of completion. The Department's failure to timely issue a certificate of completion or denial of a certificate of completion shall be considered final agency action reviewable in the county court in the jurisdiction in which the storage facility is located.

(c) The Department may charge a fee to the storage operator for reviewing the certificate of completion application. The fee shall be in the amount set by Department rule. The amount shall be based on the Department's anticipated expenses that it shall incur in reviewing the certificate of completion application and shall not exceed $10,000.

(d) Once a certificate of completion is issued, the following occurs:

(1) Title to the storage facility and to the stored carbon dioxide transfers, without compensation, to the State.

(2) Title acquired by the State includes all rights and interests in, and all responsibilities, including regulatory requirements associated with, the stored carbon dioxide, so long as the State and the storage operator may contractually agree that the storage operator shall continue to comply with regulatory requirements associated with the storage facility on the State's behalf.

(3) The storage operator and, to the extent the owner is a separate entity from the storage operator, the owner of the geologic storage site, including the owner of any surface and subsurface infrastructure associated with the storage facility, are released from and the State assumes all regulatory requirements and liability associated with the storage facility.

(4) Monitoring and managing the storage facility is the State's responsibility to be overseen by the Department unless and until the federal government assumes responsibility for the long-term monitoring and management of storage facilities. Upon federal government assumption of responsibility, funds in the Illinois Geologic Sequestration Special Fund shall be transferred to any such parallel fund under federal law for purposes of long-term monitoring and management of storage facilities. To the extent such a fund does not exist, the State shall refund the fees contributed by the storage operators to each party.

(5) If the federal government has not assumed responsibility for the long-term monitoring and management of storage facilities, then the Illinois Geologic Sequestration Special Fund shall be used for the purposes of monitoring and managing the storage facilities and any other responsibility associated with the stored carbon dioxide.

Section 60. Enhanced recovery projects. This Act does not apply to applications filed with the Department proposing to use carbon dioxide for an enhanced oil or gas recovery project. Such applications shall be processed pursuant the Illinois Oil and Gas Act.

Section 65. Department powers; home rule. The Department may adopt rules and issue orders to enforce this Act. The Department may authorize its employees, qualified by training and experience, to perform the powers and duties set forth in this Act. No agency of State government or political subdivision of the State may regulate geologic storage except as expressly authorized under this Act; so long as nothing in this Section 65 restricts or interferes with the Illinois Environmental Protection Agency's authority to:

(1) issue any necessary permits for operation of aboveground facilities associated with the geologic storage project; or

(2) issue permits under the UIC program and inspect geologic storage sites pursuant to Section 13.7 of the Environmental Protection Act. To the extent there is any inconsistency between this Act and Section 13.7 of the Environmental Protection Act, this Act shall control.

This Section is a limitation under subsection (i) of Section 6 of Article VII of the Illinois Constitution on the concurrent exercise by home rule units of powers and functions exercised by the State.

Section 70. Restraint of trade. None of the rights and responsibilities pursuant to this Act shall be held or construed to violate any of the statutes of this State relating to trusts, monopolies, or contracts and combinations in the restraint of trade.

Section 75. Illinois Geologic Sequestration Special Fund. The Illinois Geologic Sequestration Special Fund is created as a special fund in the State treasury. The Fund shall consist of any money deposited into the Fund as provided in subsection (e) of Section 20. Money in the Fund shall be used for the administration of this Act and for no other purpose. All interest earned on money in the Fund shall be deposited into the Fund.

Section 97. Severability. The provisions of this Act are severable under Section 1.31 of the Statute on Statutes.

Section 905. The State Finance Act is amended by adding Section 5.935 as follows:

(30 ILCS 105/5.935 new)

Sec. 5.935. The Illinois Geologic Sequestration Special Fund.".